Matt Reed: CVS will win patients with clear prices

Consumers with new plans can't shop without disclosure

CVS pharmacist Ramesh Nimmala gives a flu shot to Peggy Kelly of Merritt Island at a Cocoa Beach store. With its end to tobacco sales, the drug store chain is rebranding as neighborhood health-care centers.

How can CVS afford to halt cigarette sales at the counters of so many Space Coast drug stores?

For a clue, listen for gasps and groans in the pharmacy area.

Executives for CVS Caremark think those will be the sounds of customers getting flu shots or treatment for jellyfish stings. CVS has big plans under Obamacare.

Just as likely, it will be the sound of customers with new high-deductible insurance plans discovering the costs of their monthly refills have quadrupled. They are desperate for price information and already rationing their own care out of fear, recently published studies show. CVS will be ready for them with $31.99 flu shots and, at more stores, flat-rate $79 to $89 treatment by nurse practitioners or physician assistants.

What does either have to do with sales of Winstons or Marlboro Lights?

Directly, not much.

"Stopping the sale of cigarettes and tobacco will make a significant difference in reducing the chronic illnesses associated with tobacco use," Dr. Troyen Brennan, chief medical officer for CVS Caremark, said in a prepared statement Wednesday.

Obamacare opportunity

As if smokers can't feed their habits at 7-Eleven or Walgreens.

As if CVS would part with $2 billion in annual cigarette sales at 7,600 stores without knowing it will come out ahead elsewhere.

Sure enough, the company's widely reported end of tobacco sales by Oct. 1 is part of a bigger push to rebrand. It wants to evolve from a corner store with posted prices for hairspray and gummy bears to your affordable neighborhood health care provider with fair prices for treating shingles or ear infections. (Yes, it will still sell hairspray and gummy bears).

Sorry, smokers, this is serious business.

Brevard health care consumers need this option - urgently.

Under Obamacare, hospital and physician groups in Florida are organizing into networks called Accountable Care Organizations. They agree to be paid based on how patients respond to treatment, not for every stitch, test and discussion.

CVS wants to join such networks with its pharmacies and in-store MinuteClinics. But doctors and nurses across the United States were turned off by its sale of cigarettes, Brennan told Forbes.

Companies including Walgreens and Walmart also have opened walk-in clinics. But CVS thinks becoming the first major retail pharmacy to drop cigarettes will give it a competitive advantage when talking to physicians, Brennan said.

Remember, preventive care is "free" under Obamacare, meaning insurance pays 100 percent. A review of services and prices listed at MinuteClinic.com shows that is much of what CVS can provide.

CVS Caremark stock rose 2 percent in two days after the announcement.

But the real potential for CVS lies in millions of stressed-out, struggling health-care consumers.

Pent-up demand

By this year, about 80 percent of large U.S. companies will have slashed their insurance costs by moving employees from HMOS to low-premium plans with high deductibles and tax-exempt health savings accounts, Kaiser Health News says.

Instead of co-payments, workers pay for everything until they hit deductibles of about $1,500 for individuals or $3,500 or more for families. After that, they pay 20 percent.

Congressional Republicans created such plans in the mid-1990s as a way to lower overall health care costs by forcing consumers to be more selective in seeking care. Now, they are the primary type of policy sold on Obamacare exchanges.

They are scary as hell.

Insurers won't disclose negotiated prices, so workers can't know what anything costs until they open their bills or pay for pills. Hospitals and doctor groups, organized to milk Medicare or insurance companies for all they can, wind up milking our neighbors instead.

Fearing the unknown, men and low-income workers, especially, are avoiding hospitals even when they should go, research shows. A study published in Health Affairs found a 34 percent drop in hospital visits among men who suffered severe problems including chest pain and kidney stones but had high-deductible plans. Hospital visits for the same men spiked a year later.

Is CVS the place to go with chest pain or kidney stones? No.

But any health care provider that empowers consumers with clear prices for common treatments will find vast pent-up demand.

With its $2 billion tobacco ploy, a neighborhood drugstore has taken the lead.